Company Coverage
China Overseas Land & Investment (688 HK): Takeaways From Channel Checks And 1H26 Results Preview
BUY (Maintained)
Current price:
Target price:
Upside:
HK$13.08
HK$19.88
+52.0%
Analyst
Analyst
Highlights
- Property sales are on a recovery momentum. We expect ~16% blended gross profit margin in 1H26, which implies a slower yoy decline. Land investment may be skewed towards 2H26.
- We foresee revaluation loss from IP in 1H26, excluding which, core net profit is estimated to decline at low-teens yoy. Higher sales and lower land investment in 1H26 should have resulted in lower net gearing as of Jun 26.
- Reiterate BUY with a target price of HK$19.88. Having outperformed the HSI in the month after results in eight of the past 10 announcements, COLI remains our top pick.
Analysis
- We conducted a channel check on COLI on 13 July. Key takeaways are:
- Property sales are recovering. For COLI, contracted sales grew 11.8% yoy to Rmb134.35b in 1H26, driven by a 27% yoy growth in ASP. Both newly launched projects and existing projects saw improved sales performance. Since late-June, visits to sales office and the visit-to-sales conversion ratio have seen a mom decline; however, this is mainly due to seasonality rather than being a weakening trend. With a lower base last year and better sentiment in Tier 1 cities, we expect improving yoy growth in contracted sales in Jul and Aug 26. We believe COLI is able to achieve its target of sales stabilisation in 2026 from 2025’s Rmb251.23b.
- Margin pressure may ease, with expected slower yoy decline in 1H26. We expect gross profit margin of property development (PD) to be near the upper end of the 13-15% guidance range (vs 15.8% in 1H25), and the blended gross profit margin at around 16% (vs 17.4% in 1H25). The expected narrower margin compression, compared with -4.7ppt yoy in 1H25 and -2.2ppt in 2025, is largely driven by higher margin on projects acquired during the market trough. Historically, COLI’s margins tend to be higher in 1H and lower in 2H due to increased year-end inventory sell-down, and COLI reiterated its PD gross margin guidance of 13.0-15.0% (vs 13.9% in 2025), which in our view points to a gradual stabilisation of margins in 2026.
Highlights
- Property sales are on a recovery momentum. We expect ~16% blended gross profit margin in 1H26, which implies a slower yoy decline. Land investment may be skewed towards 2H26.
- We foresee revaluation loss from IP in 1H26, excluding which, core net profit is estimated to decline at low-teens yoy. Higher sales and lower land investment in 1H26 should have resulted in lower net gearing as of Jun 26.
- Reiterate BUY with a target price of HK$19.88. Having outperformed the HSI in the month after results in eight of the past 10 announcements, COLI remains our top pick.
Analysis
- We conducted a channel check on COLI on 13 July. Key takeaways are:
- Property sales are recovering. For COLI, contracted sales grew 11.8% yoy to Rmb134.35b in 1H26, driven by a 27% yoy growth in ASP. Both newly launched projects and existing projects saw improved sales performance. Since late-June, visits to sales office and the visit-to-sales conversion ratio have seen a mom decline; however, this is mainly due to seasonality rather than being a weakening trend. With a lower base last year and better sentiment in Tier 1 cities, we expect improving yoy growth in contracted sales in Jul and Aug 26. We believe COLI is able to achieve its target of sales stabilisation in 2026 from 2025’s Rmb251.23b.
- Margin pressure may ease, with expected slower yoy decline in 1H26. We expect gross profit margin of property development (PD) to be near the upper end of the 13-15% guidance range (vs 15.8% in 1H25), and the blended gross profit margin at around 16% (vs 17.4% in 1H25). The expected narrower margin compression, compared with -4.7ppt yoy in 1H25 and -2.2ppt in 2025, is largely driven by higher margin on projects acquired during the market trough. Historically, COLI’s margins tend to be higher in 1H and lower in 2H due to increased year-end inventory sell-down, and COLI reiterated its PD gross margin guidance of 13.0-15.0% (vs 13.9% in 2025), which in our view points to a gradual stabilisation of margins in 2026.
BUY (Maintained)
Current price:
Target price:
Upside:
HK$13.08
HK$19.88
+52.0%
Analyst
Analyst
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